The Treasury misses out on billions of pounds in lost revenue as a result of illicit tobacco (Image: Getty)
Britain would have the cash to fund winter fuel payments for all pensioners if the Treasury stopped losing billions of pounds to “illicit tobacco”, according to a passionate campaigners against contraband cigarettes.
It missed out on an estimated ￡2.2billion in excise duty and VAT in 2022-23 – far more than the ￡1.4billion the Treasury hopes to raise by limiting winter fuel payments to the poorest pensioners.
Former security minister Sir John Hayes described illicit tobacco as an “outrage”.
He said: “There’s a lot of evidence it’s foreign-run and foreign-controlled. No effort should be spared to close down these traders, to catch them and prosecute them.
“That would mean more legal cigarettes would be sold and the revenue could be collected and hopefully the Government would then be able to change its ludicrous decision to deprive pensioners of their winter fuel which has been drawn into sharp focus by this snap of cold weather when old people will be shivering as a direct result of Rachel Reeves and Keir Starmer.”
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Last year Border Force seized more than 823million cigarettes and there are fears that tightening restrictions on tobacco will increase demand for illegal products.
James Lowman, chief executive of the Association of Convenience Stores, said: “The illicit tobacco and vaping market costs the Treasury billions every year in lost revenue, and this will only continue to rise as regulations get tighter on the products that are legal for sale. The Government urgently needs to invest tens of millions more in local enforcement to shut down these rogue traders and support legitimate retailers.”
HM Revenue and Customs (HMRC) says it has “slashed the tax gap” on illicit cigarettes and tobacco by more than half since 2005. Between April 2023 and March this year, it adds, cigarettes worth more than ￡678million in tax were seized, alongside hand-rolling tobacco worth ￡41million.
During this time prison sentences totalling 148 years against 107 cigarette and tobacco fraudsters were secured.
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Hazel Cheeseman of Action on Smoking and Health said the tobacco industry has a “long history of overplaying concerns about illicit tobacco to detract and undermine policy to reduce tobacco use overall”.
She said: “A coordinated strategy to address illicit tobacco has been in place for some time and has been effective at driving down the illicit market. During the 1990s, thanks in part to tobacco industry complicity, there were far higher levels of illicit tobacco.
“There is always more that can be done though. The Government is bringing in a new retail licensing scheme in as part of the incoming Tobacco and Vapes Bill, which should help suppress the illicit tobacco market further.”